3. Maybe they mean he can shoot the two OR the three?? The AP says, "Versatile Carmelo Anthony emerges as star for the U.S." God help us. Old "stop snitchin' ", sucker punching 'Melo can shoot, that is for sure, but versatile?? The only evidence given is that he averaged 3.7 rebounds a game in last years world championships, which is fairly underwhelming.

4. Marco Materazzi finally reveals what he said to made Zinidine Zidane go medieval and lose the world cup for France

5. Finally and sadly, is there a bigger scumbag on the planet than Michael Vick?

Friday, August 17, 2007

Over at Real Clear Politics, Steven Stark interestingly writes that "The Debates are Killing Edwards and Obama".exposure in these forums institutionalizes the leads of front-runners in the polls. That is one reason why, in this era of frequent primary debates, early front-runners tend to do better than they did from 1960 through 1988. The candidates in the back of the pack, of course, flock to the debates for the prime-time exposure and the chance to stand toe-to-toe against the leader. But that's not the kind of equal time these challengers need.

If, say, Edwards or Obama could debate Hillary one-on-one, things might be different. But when they share the stage with a full array of challengers, they fade into the woodwork -- at least as far as the press is concerned. Debates become a matter of the front-runner in the polls vs. the pack, which is the main reason the press inevitably crowns Hillary or Rudy Giuliani the winner of almost every encounter, even when their performances hardly warrant it.

Moreover, in a crowded field, if the challengers attempt to criticize the front-runner, they come off looking negative, and a third candidate benefits from the attack. The debates effectively insulate the front-runners from criticism, cementing their lead.

Interesting and quite possibly true, but for me the best part is how Stark gives yet another reason to love Dennis Kucinich:

the dynamics of the 2007 Democratic debates are destroying the campaigns of the major challengers. Take Edwards. His calling card is that he's the candidate of real change, and he's backed that up by taking stands on issues such as NAFTA, which separate him from the mainstream.

But every time Edwards goes to his left, Dennis Kucinich -- who has no chance to be president and therefore can take any stand he pleases with impunity -- goes further left. This has the effect of making Edwards look like just another timid moderate, which is hardly what he is.

I agree with Stark that Edwards is not a timid moderate, but I bet that we would agree to disagree on what we think Edwards in fact is.

So the Oracle of Starbucks can divine your personality from your drink order. I like to have a tall cappuccino with an extra shot of espresso. Sounds good, no? Well..........

Behold the Oracle's wisdom:

Personality type: High Maintenance

You pride yourself on being assertive and direct; everyone else thinks you're bossy and arrogant. You're constantly running your mouth about topics that only you would find interesting. Your capacity for wasting other people's time is limitless. Your friends find you intolerable, that's why they're plotting to kill you.Also drinks: Water. Bottled, chilled, with four ice cubes, a twist of lemon, in a crystal glass.Can also be found at: Trendy martini bars

Mungowitz likes venti sized day old cold coffee, which, according to the oracle (and I am not making this up), makes him an "Ass-Clown" who also drinks Zima and frequents Karaoke bars!

Thursday, August 16, 2007

"'Wednesday is the type of day people will remember in quant-land for a very long time,' Matthew Rothman, head of quantitative equity strategies for Lehman Brothers told the Wall Street Journal last week. 'Events that models only predicted would happen once in 10,000 years happened every day for three days.' Strangely, these same models failed to predict the once-in-10,000-year events that roiled the markets in 1997, 1998, 2001, and 2002...Several money managers blamed their temporary problems on investors' irrational collective behavior. 'Investor fear has overtaken reason and has induced a period in which most securities have simply ceased to trade,' said Sentinel Management, which sought to halt redemptions of some of its funds this week. And such conditions make it 'virtually impossible to properly price securities or to trade them.' Goldman Sachs CFO David Viniar noted that the firm's decision to inject $2 billion into its ailing Global Equity Opportunities fund 'reflects our collective belief that the value of this fund is suffering from a market dislocation that does not reflect the fundamental value of the fund's positions.' In other words, the losses shown by these funds isn't the fault of the managers, it's the fault of a market that just won't value assets properly. Ironically, you never hear fund managers say that their gains have been unwarrantedly large due to the market's failure to reflect stocks' fundamental value...'We have been caught in what appears to be a large wave of de-leveraging on the part of quantitative long/short hedge funds,' James Simons of Renaissance Technologies said in a letter to investors last week, which sought to explain losses in his highly regarded hedge fund. He also noted that the methodology used by his fund was 'undoubtedly shared by a number of long/short hedge funds.' Goldman Sachs similarly blamed other funds' behavior for its own losses. Of course, the premise of high-end money management is that you don't simply mimic the same investment strategy of 30 other hedge funds. That's why Simons was paid $1.7 billion in 2006."

To me, it just seems like a tautological application of the Theory of the Firm, transactions cost edition.

Securing sex with someone who knows what you like, and looks good enough to make you like it, arranging for distribution of effort in household services, care of children....There are so many things that are costly and aggravating to try to secure on the spot market, every day.

This raises the question of the size of the firm, of course. Coase's principle is that at the margin the firm will expand until the marginal transaction is more expensive to arrange inside the firm than through a market. I have one wife; my wife has one husband. One could imagine other arrangements (that's mighty bigamy!), but look at the transactions costs encountered by Cedric the Entertainer.

There have been times my wife and I considered dissolving this firm, but not seriously. We have been married 21 years, and have negotiated arrangements on nearly every margin that have essentially zero transactions costs. We don't have arguments, because we both know how it would end up. (Sometimes I would win, sometimes she would, but we know the moves and the result, so we don't start).

Are there hold-up problems? Are there times she looks at other men and thinks, "MMM, he looks yummy!" You bet. But the expected costs of cheating involve some chance of forfeiting extremely large benefits that extend far into the future.

I do nearly all the cooking, and have always been able to spend a lot of time with the children. I drive car pool, and often go to school functions. I do these things partly out of love for the children, but also because in exchange I receive extremely high quality services of many kinds.

My wife is an attorney for the Federal government, and in addition manages the logistics of the household with remarkable skill and efficiency. She does all the finances, runs the calendar, does all the paperwork for schools, takes care of medical appointments, and files all insurance and other clerical work. She does all the shopping, and cleans the house. She is extraordinarily physically attractive (in my view), and is interesting to talk to on almost any subject.

Divorce, or an "open relationship," would be tremendously costly. (Yes, she's a lawyer, so it would be expensive in terms of money, but that's not what I mean.) I couldn't possibly work through the hold-up and monitoring costs of contracting for household cleaning, managing books, doing taxes.

Marriage has been analyzed through a theory of the firm, or contracting, perspective. (Becker, Gary S. A Treatise on the Family. Cambridge, Mass.: HarvardUniversity Press, 1991; Becker, G. S. (1973). “A Theory of Marriage: Part I.” Journal of Political Economy 81(4): 813-46; Becker, G. S. (1974). “A Theory of Marriage: Part II.” Journal of Political Economy 82(2, Part II): S11-S26.

So why pretend economists are too stupid to know the theory of the firm?

He is no less willing to explain the motivations of the novel's academics, who he maintains are "shameless exaggerations of campus types" (though anyone who has spent time on campus recently might find them surprisingly realistic). There is, for instance, the economics professor in an "open" relationship with his wife who "is not even sure there is a rational case to be made for traditional marriage any more." Mr. Carter, who in his life as a Christian intellectual would have no trouble mounting a spirited defense of such old-fashioned arrangements, tells me: "It's not that by his own lights he's amoral. It's that he would find most of what others would call immorality to be inefficient interference with the pursuit of happiness." (from WSJ interview with Stephen Carter)

Morals are names for equilibria of games we don't understand very well. And they are unstable equilibria; cheating kills them. But cooperations is a Nash equilibrium in many repeated games, including PDs. Marriage is just a kind of cooperation.

The Mungowitz said: If you want to help poor people in other countries, then cut U.S. barriers to buying their stuff. And stop giving them "free" stuff that we buy up as surplus (i.e., politically motivated subsidies) from farmers or clothing manufacturers. All that does is bankrupt the small businesses in developing nations that are trying to supply the domestic market.

CARE, one of the world’s biggest charities, is walking away from some $45 million a year in federal financing, saying American food aid is not only plagued with inefficiencies, but also may hurt some of the very poor people it aims to help.

CARE’s decision is focused on the practice of selling tons of often heavily subsidized American farm products in African countries that in some cases, it says, compete with the crops of struggling local farmers.

The charity says it will phase out its use of the practice by 2009. But it has already deeply divided the world of food aid and has spurred growing criticism of the practice as Congress considers a new farm bill.

“If someone wants to help you, they shouldn’t do it by destroying the very thing that they’re trying to promote,” said George Odo, a CARE official who grew disillusioned with the practice while supervising the sale of American wheat and vegetable oil in Nairobi, Kenya’s capital.

A Brazilian footballer improbably named "Richarlyson" -- whose father played professionally and whose brother played in Portugal and is now with Brazil's Cruzeiro -- filed a criminal complaint for slander against Palmeiras club director Jose Cyrillo Junior for insinuating that he (Richarlyson) was gay.

Judge Filho stoked the dispute by dismissing Richarlyson's claim and issuing a ruling that suggested he leave the game if he were gay. If he weren't, the judge said, Richarlyson was obliged to defend himself on the same TV program.

"Not that a homosexual can't play soccer," Filho wrote. "He can, but he must form his own team and federation, setting up matches with those who want to play against him."

The judge concluded it is not "reasonable to accept homosexuals in Brazilian soccer because it would hurt the uniformity present" in team sport. Soccer, the judge said, is a "virile game" but "not homosexual," and allowing gays could lead to affirmative action for the sport requiring quotas of gays.

The ruling prompted the government body that oversees judicial ethics in Brazil to demand an explanation from the judge, who has until Friday to respond.

From the Newspaper of Record:The Department of Education translates student scores on the test, known asthe National Assessment of Educational Progress, into three achievementlevels: advanced, proficient and basic. On the economics test, 42 percent of12th graders performed at or above the proficient level, and 79 percentperformed at or above the basic level. An economics course is required forgraduation in only about one-third of the states. 'The numbers here arepretty good, really,' said Darvin M. Winick, the chairman of the bipartisanbody set up by Congress to oversee the test. 'Given the number of studentswho finish high school with a limited vocabulary, not reading well and weakin math, the results may be as good or better than we should expect.' Incontrast, only 13 percent of 12th grade students performed at or aboveproficient, and only 47 percent performed at or above the basic level on thenational assessment test in history that was administered last year. On asimilar test in science in 2005, only 54 percent of 12th grade studentsperformed at or above the basic level, and just 18 percent at or aboveproficient.

Question 1: Which of the following is a policy tool of the Federal Reserve? A. Raising or lowering income taxes B. Increasing or decreasing unemployment benefits C. Buying or selling government securities D. Increasing or decreasing government spending

Question 3: Two countries are currently trading with each other. The countries agree to remove all trade restrictions on products traded between them. Which of the following is most likely to decrease? A. The variety of goods available B. The prices of imported goods C. The quality of goods available D. The amount of imported goods

Question 4: Which of the following has been most important in reducing poverty over time? A. Taxes B. Economic growth C. International trade D. Government regulations

Question 5: What happens to most of the money deposited in checking accounts at acommercial bank? A. It is used to pay the bank’s expenses. B. It is loaned to other bank customers. C. It is kept in the bank’s vault until depositors withdraw the funds. D. It is paid to owners of the bank as return on their investment.

Wednesday, August 15, 2007

The June trade deficit was 1.7% smaller than May's, even though it was expected to rise. This new information means that the 3.4% second quarter growth rate is going to actually be higher, probably a bit above 4%, and forecasts of the third quarter growth rate will likely be raised a bit as well.

A couple other points here. (1) Exports grew faster than imports, so the decreased deficit was not just coming from reduced US demand, (2) this occurred even as oil prices continued to rise (and thus raise the nominal value of imports.

On the inflation front, the CPI rose by 0.1% in July ("core" inflation by 0.2%), so far for the year, core inflation is running at a 2.3% rate.

Venezuelan businessman, Guido Antonini Wilson, 46, was stopped with a suitcase stuffed with cash by an airport customs official after arriving in Buenos Aires from Caracas on a plane chartered by the Argentine government’s national energy company.

The plane also carried four executives from Venezuela’s state oil company, Petróleos de Venezuela, and three Argentine government officials. The money’s source, and for whom or what it was intended, is still under investigation. But within days, (President) Kirchner dismissed Claudio Uberti, the Argentine official who had offered Mr. Antonini Wilson a seat on the plane. He also demanded answers from the government of President Hugo Chávez of Venezuela. “I am not covering up anything,” Mr. Kirchner said at a public event last week, according to news reports. “My hands are clean."

In a news conference late last week, María Luz Rivas Diez, the Argentine attorney general, said Mr. Antonini Wilson had made 12 trips to Argentina in the past year, some for less than a day.She told a Buenos Aires radio station over the weekend that she could not rule out money-laundering as a possible motivation, nor filing charges against Mr. Antonini Wilson, who had been allowed to leave Argentina and whose whereabouts were unknown.

This is interesting for a few reasons. Firstly, there is a Presidential election in Argentina at the end of October and Mrs. Kirchner is running. Though she is the clear front runner, this incident along with a recent oil pipeline kickback scandal, the discovery of $64000 in small bills hidden in the bathroom of the Economics Minister, and an investigation into charges that the regime has systematically underreported inflation, has dented the Kirchnerian reputation. Luckily for them, several of the competing candidates are economists and thus completely unable to exploit the situation. as the Time puts it: Yet so far, the fragmented opposition has been unable to seize on the crises for much political gain. The hapless response has become the butt of jokes in local papers, with the Buenos Aires newspaper La Nación last week calling the suitcase incident “an impeccable opposition marketing operation that only lacked a candidate capable of taking advantage of it.”

Secondly, this incident may prove to be a roadblock in the ever closer Venezuela-Argentina relationship. Chavez has recently re-financed a chunk of Argentine debt and signed agreements to provide natural gas to Argentina. The mighty have clearly fallen but Argentines can't be happy with this new dependence on Venezuela, and according to todays WSJ (editorial page so take it for what its worth) "The suspicion is that the cash was intended to play a role in October's presidential election" . Kirchner has, via his chief of staff, called on Chavez (who referred to the incident as a "US plot") to apologize. In response Roberto Hernández, vice president of Venezuela’s lower house, said President Chávez “doesn’t have to say sorry” to anyone.

One of my favorite NY Times writers, John Tierney, informs me that the odds are "maybe better than even" that I (and you too) am living in a computer simulation. Tierney finds this oddly comforting:

It’s unsettling to think of the world being run by a futuristic computer geek, although we might at last dispose of that of classic theological question: How could God allow so much evil in the world? For the same reason there are plagues and earthquakes and battles in games like World of Warcraft. Peace is boring, Dude.

Then there is this:

Maybe, as suggested by Robin Hanson, an economist at George Mason University, you should try to be as interesting as possible, on the theory that the designer is more likely to keep you around for the next simulation.I would like to go on record thanking my programmer for sending me to Tanzania and Rwanda this summer and I urge her to consider a trip to Madagascar, where I am certain to do some fascinating stuff, before terminating my program.

Lou Dobbs called my friend, ex-student, and uber-blogger Alex Tabarrok a "complete idiot" last night on his (Lou's) show. Check out the video here. Dobbs also referred to the 500 economists who signed a letter in favor of increased immigration as "jackasses".

In his big finish, Lou said the economists problem was they had forgotten about the "free enterprise" that made this country great and worshiped nefarious "free markets" instead.

Critics of market economies in general, and globalization in particular, contend that they have unleashed forces leading to large and pervasive increases in inequality within countries. In a recent paper we examine household survey evidence from 80 countries over the past four decades and find that this is simply not so 1. When inequality is on the rise, poor households benefit less from economic growth than wealthier ones. In fact, average incomes of the poorest fifth of society rise proportionally with per capita income, indicating that inequality does not systematically increase with growth. Since few countries show significant trends in income inequality, on average economic growth has been the main driving force of poverty reduction in developing countries. A good example in the 1990s is Vietnam, which experienced rapid per capita GDP growth of 6 percent per year with no significant change in the distribution of income. This distributionally-neutral growth led to tremendous improvements in the material well-being of poor Vietnamese.

Of course there are deviations from this general relationship between growth in average incomes and growth in incomes of the poorest fifth of the population. Our research suggests that popular explanations for these deviations are not supported by evidence. In particular, a) the relationship between growth and incomes of the poor does not differ between periods of crisis and periods of normal growth; b) growth�s impact on the poorest quintile has not weakened in recent decades as globalization has become more pronounced; c) growth spurred by an open trade regime or other growth-enhancing policies such as good rule of law and macro stability does not in general have adverse effects on poor households. In fact such policies, on average, benefit poor households as much as the typical household, and some policies, notably stabilizing from high inflation, disproportionately benefit the poor.

Clearly, growth-enhancing policies such as sound rule of law, macro stability, and openness to trade are not all that is needed to improve the lives of the poor. But to the extent that such policies underpin growth they are a critical component of poverty reduction. Anyone who cares about the well-being of the poor should therefore support developing countries as they participate more in international trade and put in place a healthy environment for economic growth.

If you want to help poor people in other countries, then cut U.S. barriers to buying their stuff. And stop giving them "free" stuff that we buy up as surplus (i.e., politically motivated subsidies) from farmers or clothing manufacturers. All that does is bankrupt the small businesses in developing nations that are trying to supply the domestic market.

After the Fed's "liquidity injection" last Friday the calls for a rate cut are deafening, with predictions that it will happen even before the next scheduled Board of Governors meeting in September.

Comparisons abound to 1998 when in the wake of the Russian default and the Long Term Capital meltdown, Alan Greenspan lowered rates by 750 basis points and created the famous Greenspan put, which leads me (finally) to my point and my question.

Wouldn't public perception of the existence of the Greenspan put have created moral hazard? Wouldn't the idea that in a crisis the Fed will float away problems encourage people to invest heavily in junk bonds and securitized sub-prime mortages? In other words, doesn't the bailout of 1998 have at least something to do with the current crisis?

People have invested so heavily in highly risky assets that the spread between them and treasuries had become vanishingly thin. People seemed to be chasing yield without regard to risk, and now they are paying the price.

Is another bailout the right answer? In the colorful idiom of central banking, Should "Helicopter Ben" exercise the "Greenspan Put", or is moral hazard a serious enough problem that we should stop creating it regardless of the short term discomfort?

In the light of Tiger's PGA victory and Roger's Masters series defeat at the hands of Novak Djokavich, KPC asks: Who is the greatest, Federer or Woods?

Here is the tale of the tape:

Federer: 26 years old, 11 majors (with one left to go this year, the US open, where he is the defending champ). Number one since February 2004. Looking to break the all time record in his sport of major wins in his sport held by Pete Sampras at 15. 49 Career titles. Has never won the French Open

Woods: 31 years old, 13 majors. Number one since July 2005 (and several times before that). Looking to break the all time record of major wins in his sport held by Jack Nicklaus at 18. 60 Career titles. Has won all four of the major tournaments at least once.

I personally got Eldrick. 31 is younger in golf years than 26 is in tennis years (think about it relative to the ages where people's performance starts to fall off in the two sports) and Federer has Nadal (who is younger) breathing down his neck having beaten him in the last three French opens (including the last two finals) and Rafa took Fed to a 5th set in the Wimbledon final this year on Roger's favorite surface.

So Eldrick has more time and less of a nemesis, but the factor in Fed's favor is that, other things equal, IT IS SO MUCH HARDER TO WIN A GOLF TOURNAMENT THAN A TENNIS TOURNAMENT. In tennis, you gotta beat 7 people to win a major. In golf, you gotta beat everybody in the field. That is a big big difference.

Bottom line for me: I think Fed will tie Sampras at best, while Woods will go north of 20 majors.

Sunday, August 12, 2007

The difference between those three is The Godfather trilogy. One is Fredo, who was never ready to have it handed over to him. One is Sonny, who will do whatever it takes to be the man, and one is Michael, who, if you watch the trilogy, the Godfather hands it over to Michael. So I have no problem handing it over to Dwyane. I would love to see the ball in my hands, but I'm not the best player or shooter on this team. I don't mind handing it over to Michael Dwyane Corleone.